Jamie Coutts is the chief crypto analyst for Real Vision. He says that Bitcoin’s most recent drop has nothing to do crypto-native flow and everything to due with dollar.
Two charts for X Coutts argued The recent rebound of the US Dollar Index DXY has temporarily tightened global liquidity, and pushed risk assets to the limit. “Bitcoin’s dip isn’t mysterious — it’s macro,” He has written.
Why has Bitcoin declined?
“The dollar’s rebound is tightening global liquidity. DXY is retesting 100–101 — a key resistance and natural mean-reversion zone after one of the sharpest declines in decades in 1H25. Positioning had become crowded on the short side, so a bounce was always likely. The real question: is this the start of a new dollar cycle or just the setup for the next leg lower? Base case: liquidity tailwinds and an improving business cycle keep the outlook for risk assets bullish into mid-2026,” He added.
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In the first chart that he provided, the USD COT Index is compared to the US Dollar Index. The COT Index fell into negative territory by mid-2025 after a long-term decline in 1H25.
The capitulation created the perfect conditions for an anti-trend squeeze. The price panel shows DXY clawing back toward the 100-101 area—a zone that lines up with prior congestion and the underside of this year’s breakdown—while the COT bars remain below zero, consistent with short-covering dynamics rather than a fully rebuilt long-dollar consensus.
Coutts’ second chart overlays DXY with the Global Liquidity Index. Both series are closely linked: When the dollar weakens, the global liquidity index rises as well. This has historically coincided with better performance of duration-sensitive assets like equities or crypto.
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In recent weeks, both the blue and white inverse-DXY lines have rolled modestly, showing the Coutts’ transmission mechanism. A firmer dollar means less global dollar liquidity on the margins, which, in turn reduces crypto beta.
BTC Prices: What this Means
This way, Bitcoin’s decline is not due to a collapse in the crypto-structure, but rather a simple function of FX means reversion, and futures positions. The “crowded short” in dollar futures telegraphed vulnerability to a bounce, and the mean-reversion target around 100–101 offered a logical waypoint for that move.
If DXY stalls and resumes lower from that band—consistent with the broader 2025 downtrend—liquidity conditions It is likely that the price of high beta assets would ease back down. In the event that it pushes past and stays above this area, Bitcoin could be facing a longer-lasting dollar surge and a slow return to positive liquidity momentum.
Coutts’ “base case” The outlook is positive despite the short-term challenges: an improved global economic cycle, and continued tailwinds in liquidity until mid-2026. Bitcoin’s dollar-related declines are therefore cyclical rather than secular. The immediate pivot point sits in plain view on his charts: the DXY’s 100–101 retest, born from stretched speculative shorts and classic mean reversion, is dictating BTC’s temperature for now.
Bitcoin was trading at $121 703 as of press time.
Featured image was created with DALL.E chart by TradingView.com
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Source: www.newsbtc.com
